Israel’s fintech startups reap fruit of Citi mentorship

Israeli start-up Sling’s recent acquisition by Brazilian micro-credit company Avante for an undisclosed amount is just one example of the potential for startups fostered by the financial technology hubs set up in Tel Aviv.

Sling, whose platform allows micro-merchants to accept electronic payments from consumers via smartphones, was part of Citi’s third Tel Aviv-based financial technology accelerator program — a mentoring course that lasts four months and aims to foster technology in the financial sector.

To date, a total of 53 startups have graduated from Citi’s Israel accelerator, managing to raise a total of $185 million in investments from parties in Israel and abroad, Tsafrir Attar, head of Citi’s program in Tel Aviv, said in an interview.

Set up in November 2013 as part of Citi’s financial technology — or fintech — hub in Tel Aviv, the accelerator program was the first one set up by the financial giant globally, and aims to identify and grow key technologies that could play a leading role in the changing dynamics of the global financial industry.

“Developments are moving so fast in the sector that all the big banks are setting up hubs here in Israel to try and stay ahead of the game,” said Atar. “The key is to be exposed to and explore as many new developments and ideas as possible at the same time, before going ahead and deciding in which areas to move forward. Israel, with its strong innovative tradition, can play a pivotal role in this sector which is growing significantly around the world.”

Tsafrir Atar, head of Citi’s accelerator program in Tel Aviv (Courtesy)

International banks including Citi, Barclays Bank Plc., HSBC and Banco Santander have all set up fintech hubs in Tel Aviv as new technologies are changing the world of finance and especially the way consumer banks work.

Banks globally have the huge numbers of clients and size, but new entrants usually have an innovative edge, Citi’s March 2016 report on the sector said.

Global fintech investments have grown from just $1.8 billion in 2010 to $19 billion in 2015. In China, new fintech companies have already reached a combination of both size and innovation, the report said, whereas the US and Europe are “just in the early stages” of the consumer banking disruption cycle .

Citi is at the moment in the midst of its fifth accelerator program in Israel, mentoring 10 startups by providing them access to experts within the company globally to bounce ideas off of and the opportunity to use the bank’s huge infrastructure as beta sites.

Some of the companies in the latest accelerator program include the Ramat Gan-based MatchBox, which allows merchants to trace payments, made via credit card companies, that have gone astray; San Antonio- and Kiryat Ono-based Elasticode, which enables mobile app users to provide proactive self-service customer support on mobile devices in real time and remotely; and Herzliya’s RevenueStream, which has created an artificial intelligence-based platform to track down credit card fraud.

“The accelerator allows startups an entry to start doing business with giants like Citi, while Citi sees it as an opportunity to get exposure to all the disruptive technologies that are out there,” said Atar.

The accelerator chooses 10 companies for each four-month cycle out of the hundred candidates that apply, he said. Citi does its mentoring and fostering pro bono, without taking any stakes in the companies it fosters. Startups’ focuses range from payment methods to fraud detection and cybersecurity, Atar said.

“Our startups work with heads of business lines within Citi, and we make sure the mentors they work with are tailor-made to each,” Atar said. “In this way the startups also get first exposure to key decision makers in the financial world.”

Citi’s operations in Israel stem from its belief that “Israel can be a fintech power,” Atar said. “The sector is at the height of growth globally and Israel can play a significant role in this growing ecosystem.”